The Basics of Arbitration
Arbitration is a process in which disputing parties present their respective cases by the use of evidence to a third party neutral, i.e. an Arbitrator, who renders a binding decision on the merits. (Arbitration, by agreement, can be handled on a non-binding basis.) The process is essentially an informal and private form of litigation and does not involve negotiation. Virtually any case that can be litigated can be arbitrated although cases affecting the rights of children may be subject to ongoing judicial review.
AGREEING TO ARBITRATE
Typically, parties agree to arbitrate by executing documents provided by The McCammon Group (TMG). TMG’s Agreement to Arbitrate is available at www.McCammonGroup.com.
Alternatively, parties may obligate themselves to arbitrate by executing an external Agreement to Arbitrate not drafted by TMG. In such situations, TMG may serve as the arbitration service, but only in the following circumstances:
i. The External Agreement to Arbitrate specifies that TMG or one of its Neutrals shall provide the arbitration service.
ii. The External Agreement to Arbitrate specifies that TMG’s Rules, or some alternative set of rules acceptable to TMG, shall govern. If TMG’s Rules are specified, the applicable version of TMG’s Rules will be those available on TMG’s website at the time the Claim is initiated.
iii. Within a reasonable time after the date on which the Arbitration is initiated, the Claimant shall deliver to the opposing Party copies of all the materials that have been delivered by the Claimant to TMG pursuant to this Rule.
iv. If the Respondent is not responsive, there must be a showing by the Claimant that there was actual notice provided to the Respondent regarding the initiation of the Arbitration.
v. There are no known issues or conditions either in the External Agreement to Arbitrate or in the surrounding circumstances that would threaten the fundamental fairness of the process.
vi. There must be adequate arrangements in place to pay for the services of TMG.
In the absence of satisfying items i and ii above, the Parties will be required to execute TMG’s Agreement to Arbitrate which incorporates TMG’s Rules.
SELECTING THE ARBITRATOR
The parties always have the right to agree on the choice of an Arbitrator. When agreement cannot be reached, a selection process will be used.
Before the arbitration begins, the attorneys and the parties, if so desired, confer with the Arbitrator, typically by phone, to cover the particulars of the arbitration: anticipated duration, attendees, witnesses, exhibits, etc. Any other issues that are of concern to the parties can be addressed in the pre-arbitration conference. If discovery is to be a part of the arbitration process, it will be addressed in the pre-arbitration conference. All these matters are handled in an informal fashion.
At the discretion of the Arbitrator, there may be reason to schedule other pre-arbitration proceedings to streamline the arbitration hearing. If it is deemed to be helpful, the parties may be required to submit prior to the arbitration various pleadings, documents, photographs, etc.
The attendance of witnesses and the production of documents at the arbitration hearing may be compelled by subpoenas pursuant to governing law.
THE ARBITRATION HEARING
Arbitration is adversarial. Although it is relatively informal, arbitration is akin to litigation.
At the hearing the Arbitrator first explains the ground rules. Generally, the hearing follows the order of a trial; however, the process is informal and subject to the discretion of the Arbitrator. The parties may give opening statements. The cases are then presented, first by the plaintiff and then by the defendant. Rebuttal is allowed.
The nature of the presentation of the cases is similar to a court proceeding e.g., swearing of witnesses, direct examination, cross-examination, submission of exhibits. However, the formal rules of evidence do not apply. The touchstones of admissibility are relevance and common sense.
The parties may give closing arguments. Post hearing briefs may be used, when needed. These matters are handled according to the wishes of the parties subject to the Arbitrator’s discretion.
As soon as is reasonable after the hearing, the Arbitrator will render a decision in the form of a written award, a simple statement reflecting the resolution of the dispute. The grounds for the decision are the facts presented and the governing law. The right of appeal from this award is limited to those grounds embodied in the arbitration statute that governs the case.
THE PROS AND CONS OF ARBITRATION
The main advantage of arbitration is closure. Once the parties engage in the process, they know that resolution will necessarily result. They also know that there is little basis to upset the Arbitrator’s decision. In certain kinds of cases, closure may be the overriding goal of the parties, and thus arbitration offers this benefit.
In highly technical cases, the parties may wish to have a decision maker who is well versed in the subject matter in question. Arbitration allows this.
Given that discovery is limited, or unavailable altogether, substantial time and costs savings may be enjoyed in arbitration. The relaxed procedures also allow for savings.
As compared to mediation, arbitration does not allow the parties to keep control of the outcome, and it often does not produce the same level of benefits as mediation in respect to cost and time savings. Nor does arbitration allow the parties to benefit from the problem solving, relation-building processes of mediation. But, used in the right situations, arbitration can be a valuable tool among the various modes of dispute resolution available.
THE ATTORNEY’S ROLE IN ARBITRATION
Arbitration is adversarial in nature, and thus there are rules and techniques, informal as they may be, in play. It follows that the role of an attorney in this process is similar to the role of an attorney in litigation. Because arbitration, once engaged, necessarily results in a decision rendered by a third party neutral, appropriate preparation is needed.